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The zones of discrimination for M-Score is as such:
An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.
During the past 13 years, the highest Beneish M-Score of Mylan NV was -1.91. The lowest was -4.16. And the median was -2.43.
The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.
The M-Score Variables:
The M-score of Mylan NV for today is based on a combination of the following eight different indices:
|M||=||-4.84||+||0.92 * DSRI||+||0.528 * GMI||+||0.404 * AQI||+||0.892 * SGI||+||0.115 * DEPI|
|=||-4.84||+||0.92 * 1.1156||+||0.528 * 0.9629||+||0.404 * 0.7689||+||0.892 * 1.1173||+||0.115 * 0.982|
|-||0.172 * SGAI||+||4.679 * TATA||-||0.327 * LVGI|
|-||0.172 * 1.0418||+||4.679 * -0.0025||-||0.327 * 1.0073|
|This Year (Dec14) TTM:||Last Year (Dec13) TTM:|
|Accounts Receivable was $2,269 Mil.|
Revenue was 2082.7 + 2084 + 1837.3 + 1715.6 = $7,720 Mil.
Gross Profit was 969 + 1012.4 + 808.8 + 737.8 = $3,528 Mil.
Total Current Assets was $6,787 Mil.
Total Assets was $15,887 Mil.
Property, Plant and Equipment(Net PPE) was $1,786 Mil.
Depreciation, Depletion and Amortization(DDA) was $567 Mil.
Selling, General & Admin. Expense(SGA) was $1,626 Mil.
Total Current Liabilities was $5,306 Mil.
Long-Term Debt was $5,733 Mil.
Net Income was 189.2 + 499.1 + 125.2 + 115.9 = $929 Mil.
Non Operating Income was -38.1 + 1.5 + -3.7 + -4.6 = $-45 Mil.
Cash Flow from Operations was 126.6 + 440.7 + 179.4 + 268.1 = $1,015 Mil.
|Accounts Receivable was $1,820 Mil.
Revenue was 1808.5 + 1767.4 + 1701.7 + 1631.5 = $6,909 Mil.
Gross Profit was 795.9 + 808.5 + 742.4 + 693.5 = $3,040 Mil.
Total Current Assets was $4,471 Mil.
Total Assets was $15,295 Mil.
Property, Plant and Equipment(Net PPE) was $1,666 Mil.
Depreciation, Depletion and Amortization(DDA) was $516 Mil.
Selling, General & Admin. Expense(SGA) was $1,397 Mil.
Total Current Liabilities was $2,964 Mil.
Long-Term Debt was $7,587 Mil.
1. DSRI = Days Sales in Receivables Index
A large increase in DSR could be indicative of revenue inflation.
|DSRI||=||(Receivables_t / Revenue_t)||/||(Receivables_t-1 / Revenue_t-1)|
|=||(2268.5 / 7719.6)||/||(1820 / 6909.1)|
2. GMI = Gross Margin Index
Measured as the ratio of gross margin in year t-1 to gross margin in year t.
Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.
|=||(GrossProfit_t-1 / Revenue_t-1)||/||(GrossProfit_t / Revenue_t)|
|=||(1012.4 / 6909.1)||/||(969 / 7719.6)|
3. AQI = Asset Quality Index
AQI is the ratio of asset quality in year t to year t-1.
|AQI||=||(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t)||/||(1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)|
|=||(1 - (6786.9 + 1785.7) / 15886.6)||/||(1 - (4471.2 + 1665.5) / 15294.8)|
4. SGI = Sales Growth Index
Ratio of sales in year t to sales in year t-1.
Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.
5. DEPI = Depreciation Index
Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.
DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.
|DEPI||=||(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1))||/||(Depreciation_t / (Depreciaton_t + PPE_t))|
|=||(516 / (516 + 1665.5))||/||(566.6 / (566.6 + 1785.7))|
6. SGAI = Sales, General and Administrative expenses Index
The ratio of SGA expenses in year t relative to year t-1.
SGA expenses index > 1 means that the company is becoming less efficient in generate sales.
|SGAI||=||(SGA_t / Sales_t)||/||(SGA_t-1 /Sales_t-1)|
|=||(1625.7 / 7719.6)||/||(1396.6 / 6909.1)|
7. LVGI = Leverage Index
The ratio of total debt to total assets in year t relative to yeat t-1.
An LVGI > 1 indicates an increase$sgai= in leverage
|LVGI||=||((LTD_t + CurrentLiabilities_t) / TotalAssets_t)||/||((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)|
|=||((5732.8 + 5305.7) / 15886.6)||/||((7586.5 + 2964) / 15294.8)|
8. TATA = Total Accruals to Total Assets
Total accruals calculated as the change in working capital accounts other than cash less depreciation.
|=||(NetIncome_t - NonOperatingIncome_t||-||CashFlowsfromOperations_t)||/||TotalAssets_t|
|=||(929.4 - -44.9||-||1014.8)||/||15886.6|
An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.
Mylan NV has a M-score of -2.41 suggests that the company will not be a manipulator.
Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations
Mylan NV Annual Data
Mylan NV Quarterly Data